MarkWest Energy Earnings in Line, Up Y/Y on Higher Volumes - Analyst Blog


Shutterstock photo

Natural gas processor and distributor MarkWest Energy Partners LP ( MWE ) reported second-quarter 2014 earnings - excluding mark-to-market derivative activity, compensation expense and asset sale adjustments - of 19 cents per unit, in-line with the Zacks Consensus Estimate. Meanwhile, the bottom line improved from the year-ago adjusted profit of 8 cents per unit. Significant improvement in natural gas processing volumes in the Marcellus and Southwest regions favored the results.

Revenues of $518.4 million failed to meet the Zacks Consensus Estimate of $532 million. The top line, however, was up approximately 25% from the second quarter of 2013.

Quarterly Cash Distribution

On Jul 24, 2014, MarkWest Energy raised its second-quarter 2014 cash distribution by 1.2% sequentially and 4.8% year over year to 88 cents per unit ($3.52 per unit annualized). Also, the distribution will be paid on Aug 14.

Distributable Cash Flow

During the reported quarter, MarkWest Energy generated distributable cash flow (DCF) - an indicator of cash paid out for distribution to unitholders - of $161.7 million, exhibiting a 26% rise from the prior-year quarter level of $128.4 million, providing 1.04x distribution coverage.

Business Units Performance

Southwest: With regard to business units, the Southwest segment's operating income increased 11.2% from the year-ago level to $83.2 million. The results reflect higher throughput and processing volumes in the East Texas and Western Oklahoma regions.  

Northeast: The segment's operating profit of $20.1 million was down 14.8% from last-year quarter's $23.6 million owing to lower fractionation volumes.

Marcellus: This segment (the partnership's Marcellus Shale joint venture) reported a profit of $110.3 million, up 36.5% from $80.8 million in the year-earlier quarter. A significant improvement in natural gas processing volume aided the upside.

Utica: Operating income from MarkWest Energy's newest segment, Utica, was $6.6 million against a loss of $1.7 million in second-quarter 2013. Higher throughput and processing volumes led to the improvement.

Operating Cost

The partnership reported operating expenses of roughly $462.7 million, reflecting a significant increase of 68.2% from $275.1 million reported in the year-earlier quarter.

Capital Expenditure & Balance Sheet

During the quarter under review, MarkWest Energy spent approximately $728.2 million capital, reflecting a decrease from $803.5 million a year ago. The partnership also declared that it had roughly $74 million of cash and cash equivalents in its wholly owned subsidiaries. Total outstanding debt stood at approximately $3.5 billion, representing a debt-to-capitalization ratio of about 39.1%.   

Zacks Rank & Other Stocks to Consider

MarkWest Energy currently has a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked players in the same industry like Atlas Pipeline Partners LP ( APL ), Delek Logistics Partners LP ( DKL ) and Kinder Morgan Management LLC ( KMR ). All the players carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

MARKWEST EGY PT (MWE): Free Stock Analysis Report

ATLAS PIPLN PTR (APL): Free Stock Analysis Report

KINDER MORG MGT (KMR): Free Stock Analysis Report

DELEK LOGISTICS (DKL): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
More Headlines for: MWE , APL , KMR , DKL

More from


Equity Research
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by